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Current Microsoft CEO Steve Ballmer has watched $1.1 billion evaporate from the value of his company stock as the selection process for a successor has dragged on and investors have expressed disappointment in the firm's apparent turn toward an internal candidate.

Since the Dec. 4 high for the stock, shares have fallen almost 9%, lowering the paper value of Ballmer's holdings by $1.1 billion, to $11.8 billion as of mid-day Thursday. Chairman and co-founder Bill Gates, who owns slightly more shares than Ballmer, "lost" $1.2 billion in his portfolio's value.

It's possible that the two will be hit even harder in the days and weeks to come.

On Thursday, MKM Partners analysts Israel Hernandez and Tyler Radke predicted that Microsoft's price will drop into the low $30-range because the company will probably select its new CEO from the pool of current company executives.

The forecast was a repeat of one Hernandez made in early December when he said Microsoft's share price would fall if Alan Mulally, CEO of Ford Motor, wasn't selected by the Microsoft board to replace Ballmer.

Mulally took himself out of the race on Tuesday when he told the Associated Press that he wanted "to end the Microsoft speculation because I have no other plans to do anything other than serve Ford."

Investors had believed that Mulally, as an outsider and someone who had cut costs and sold off divisions to turn around Ford's fortunes, would be the most likely CEO to rid Microsoft of its unprofitable or marginally-profitable pieces, like the Bing search operation and Xbox game console business. That, investors believed, would in the short term improve the bottom line and boost share price.

"A large proportion of the stock's move in 2013 was driven by speculation that Mulally would come in and return cash to shareholders, cut costs and attack sacred cows such as Bing and Xbox," wrote the MKM analysts in a note (subscription required) published on Barron's today.

Microsoft's stock price climbed by more than a third during 2013, but most of that increase came after Ballmer's abrupt retirement announcement: Between Aug. 21 and Dec. 4, shares rose 23.2%, but began to fall again when talk circulated that Mulally and other outsiders were probably out of the running.

As Mulally's prospects waned throughout December and into January, investors continued to drive down the stock.

Hernandez and Radke today also said, "We believe it is increasingly likely that an internal candidate will be promoted to CEO," echoing other reports, including from the Wall Street Journal, that said current executives Satya Nadella and Tony Bates, and Nokia's former CEO, Stephen Elop, who was once at Microsoft, are now the leading choices.

Investors have largely believed an outsider would be a better pick, seeing an insider as much more likely to continue the strategic pivot that Ballmer announced in 2012, which many believe to be misguided.

An internal candidate would also demonstrate that Gates, and to a lesser extent, Ballmer, will continue to call the shots from the board, anathema to those investors who see the pair as part of the problem with Microsoft's inability to make headway on mobile.

Gates and others have hinted that the new CEO would have to have technical chops, which pointed toward someone already inside the firm or an outsider with engineering experience in device hardware or software.

At Microsoft's November shareholder meeting, Gates said the next CEO needed "a lot of comfort in leading a highly technical organization and have an ability to work with our top technical talent." And when John Thompson, the director leading the search committee, announced in December that the new CEO would be announced in early 2014, he cited also Gates' criteria nearly word for word.